Exhibit 4.5
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 17, 1996 (this
"Agreement"), is made by and among American Bio Medica Corporation, a New York
corporation (the "Corporation"), and the person named on the signature page
hereto (the "Initial Investor").
WITNESSETH:
WHEREAS, in connection with the Private Securities Subscription Agreement,
dated as of September 17, 1996, between the Initial Investor and the Corporation
(the "Subscription Agreement"), the Corporation has agreed, upon the terms and
subject to the conditions of the Subscription Agreement, to issue and sell to
the Initial Investor shares of Series A Convertible Preferred Stock (the
"Preferred Shares"), convertible into shares (the "Shares") of Common Stock,
$.0l par value (the "Common Stock"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Corporation has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
NOW, THEREFORE, in consideration of the premises set forth above and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Corporation and
the Initial Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Investor" means the Initial Investor and any transferee or assignee
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 hereof.
(ii) "register," "registered," and registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act on such appropriate registration form
promulgated by the Commission as shall be selected by the Corporation, and, when
requested by the Initial Investor or any Investor pursuant to Section 2(b)
hereof, shall (A) be reasonably acceptable to the holders of a majority of the
Registrable Securities to which such registration relates, and (B) shall permit
the disposition of Registrable Securities in accordance with the intended method
or methods specified in the Investor's request for such registration, and the
declaration or ordering of effectiveness of such Registration Statement by the
United States Securities and Exchange Commission ("SEC").
(iii) "Registrable Securities" means those shares issuable, or issued, upon
conversion of the Preferred Shares issued and sold to the Initial Investor
including any shares issued or issuable as dividends in respect thereof.
(iv) "Registration Statement" means a registration statement under the
Securities Act registering securities of the Corporation.
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(b) As used in this Agreement, the term Investor includes (i) each Investor
(as defined above) and (ii) each person who is a permitted transferee or
assignee of the Registrable Securities pursuant to Section 9 of this Agreement.
(c) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Subscription Agreement.
2. Registration.
(a) Piggy-Back Registrations. If at any time the Corporation shall
determine to prepare and file with the SEC a Registration Statement relating to
an offering for its own account or the account of others under the Securities
Act any of its equity securities, other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Corporation
shall send to each Investor who is entitled to registration rights under this
Section 2(a) written notice of such determination and, if within twenty (20)
days after receipt of such notice, such Investor shall so request in writing,
the Corporation shall include in such Registration Statement all or any part of
the Registrable Securities such Investor requests to be registered, except that
if, in connection with any underwritten public offering for the account of the
Corporation the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, such limitation is
necessary to effect an orderly public distribution, then the Corporation shall
be obligated to include in such Registration Statement only such limited
portion, if any, of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder. Any exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include
Registrable Securities, in proportion to the number of Registrable Securities
sought to be included by such Investors; provided, however, that the Corporation
shall not exclude any Registrable Securities unless the Corporation has first
excluded all outstanding securities the holders of which are not entitled by
right to inclusion of securities in such Registration Statement; and provided
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement to the extent such pro rata allotment is permitted under
the Corporation's currently existing agreements with such holders of the
Corporation's securities.
No right to registration of Registrable Securities under this Section 2(a)
shall be construed to limit any registration required under Section 2(b) hereof.
The obligations of the Corporation under this Section 2(a) may be waived by
Investors holding a majority in interest of the Registrable Securities and shall
expire at the earlier of (i) the Corporation having afforded the opportunity for
the Investors to exercise registration rights under this Section 2(a) for two
registrations; provided, however, that any Investor who shall have had any
Registrable Securities excluded from any Registration Statement in accordance
with this Section 2(a) shall be entitled to include in an additional
Registration Statement filed by the Corporation the Registrable Securities so
excluded or (ii) when all of the Registrable Securities held by any Investor may
be sold by such Investor under Rule 144 under the Securities Act ("Rule 144")
within any three-month period.
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(b) Demand Registration. Within twenty-one (21) days after the closing
under the Subscription Agreement, the Corporation shall prepare and file a
Registration Statement covering such Registrable Securities with the SEC as
expeditiously as possible.
(c) If any offering pursuant to a Registration Statement pursuant to
Section 2(b) hereof involves (at the Corporation's election) an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering shall have the right to select
one legal counsel and an investment banker or bankers and manager or managers to
administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Corporation. The Investors who
hold the Registrable Securities to be included in such underwriting shall pay
all underwriting discounts and commissions and other fees and expenses of such
investment banker or bankers and manager or managers so selected in accordance
with this Section 2(c) (other than fees and expenses relating to registration of
Registrable Securities under federal or state securities laws which are payable
by the Corporation pursuant to Section 5 hereof) with respect to their
Registrable Securities and the fees and expenses of such legal counsel selected
by the Investors.
(d) Payments by the Corporation. It shall be the corporation's obligation
that such registration statement be declared effective within one hundred twenty
(120) days after the closing pursuant to the subscription agreement. If this
date is not met, and Investor shall have performed its obligations as set forth
in this Agreement with respect to such registration, then the Corporation will
make payments to each holder of Registrable Securities (each, a "Holder") in
such amounts and at such times as shall be determined pursuant to this Section
2(d). The amount to be paid by the Corporation to the Holders shall be
determined as of each Computation Date, and such amount shall be equal to two
percent (2%) of the aggregate subscription price paid by the Initial Investor
for the Shares pursuant to the Subscription Agreement for each month (the
"Periodic Amount"); provided, however, that if any Computation Date is less than
30 days subsequent to another Computation Date, then the Periodic Amount payable
on the later Computation Date shall be prorated. The Periodic Amount shall be
divided among all the Holders in the same proportion as each Holder's
Registrable Securities bears to the total of the outstanding Registrable
Securities. The Periodic Amount shall be paid by the Corporation within five (5)
business days after each Computation Date and shall be payable in cash.
"Computation Date" means the date which is one hundred twenty (120) days
after the closing with respect to the Subscription Agreement under Section 2(b)
and, if the Registration Statement required to be filed by the Corporation
pursuant to Section 2(b) has not theretofore been declared effective by the SEC,
each date which is 30 days after a Computation Date and, if the Registration
Statement required to be filed by the Corporation pursuant to Section 2(b) is
not declared effective by the SEC within 90 days, or 120 days in the event of an
S-1 or an underwritten offering, after the exercise of demand registration
rights under Section 2(b), the date on which such Registration Statement is
declared effective.
3. Obligations of the Corporation. In connection with the registration of
the Registrable Securities, the Corporation shall:
(a) prepare promptly and file with the SEC promptly (but in any event in
accordance with Section 2) a Registration Statement or Statements with respect
to all Registrable Securities to be included therein, and thereafter use its
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best efforts to cause the Registration Statement to become effective as soon as
reasonably possible after such filing. The Corporation shall keep the
Registration Statement effective at all times until such date as is two years
after the date such Registration Statement is first ordered effective by the
SEC. In any case, the Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the Corporation
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
provided, however, that, subject to the conditions set forth in Section 4(a)
below, each Investor may notify the Corporation in writing that it wishes to
exclude all or a portion of its Registrable Securities from such Registration
Statement.
(b) prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to keep
the Registration Statement effective at all times until such date as is two
years after the date such Registration Statement is first ordered effective by
the SEC, and, during such period, comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities of the
Corporation covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
(c) furnish to each Investor whose Registrable Securities are included in
the Registration Statement, such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;
(d) use reasonable efforts to (i) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Investors who hold a majority in
interest of the Registrable Securities being offered reasonably request, (ii)
prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at all
times until such date as is the earlier of three years after the date such
Registration Statement is first ordered effective by the SEC or is three years
after the Initial Investor acquired the Shares and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Corporation shall not be
required in connection therewith or as a condition thereto to (I) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (II) subject itself to general taxation in any such
jurisdiction, (III) file a general consent to service of process in any such
jurisdiction, (IV) provide any undertakings that cause more than nominal expense
or burden to the Corporation or (V) make any change in its charter or by-laws,
which in each case the Board of Directors of the Corporation determines to be
contrary to the best interests of the Corporation and its stockholders;
(e) in the event Investors who hold a majority in interest of the
Registrable Securities being offered in the offering select underwriters for the
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offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering;
(f) as promptly as practicable after becoming aware of such event, notify
each Investor who holds Registrable Securities being sold pursuant to such
registration of the happening of any event of which the Corporation has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request;
(g) as promptly as practicable after becoming aware of such event, notify
each Investor who holds Registrable Securities being sold pursuant to such
registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time;
(h) permit a single firm of counsel designated as selling stockholders'
counsel by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of time
prior to their filing with the SEC, and shall not file any document in a form to
which such counsel reasonably objects;
(i) make generally available to its security holders as soon as practical,
but not later than ninety (90) days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 under the Securities Act) covering a twelve-month period beginning not later
than the first day of the Corporation's fiscal quarter next following the date
of the Registration Statement;
(j) at the request of the Investors who hold a majority in interest of the
Registrable Securities being sold pursuant to such registration, furnish on the
date that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement (i) a letter, dated such date, from
the Corporation's independent certified public accountants in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters;
and (ii) an opinion, dated such date, from counsel representing the Corporation
for purposes of such Registration Statement, in form and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters and Investors;
(k) make available for inspection by any Investor whose Registrable
Securities are being sold pursuant to such registration, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by any such Investor or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Corporation (collectively,
the "Records"), as shall be reasonably necessary to enable each Inspector to
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exercise its due diligence responsibility, and cause the Corporation's officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided, however, that
each Investor and each Inspector shall hold in confidence and shall not make any
disclosure (except to an Investor) of any Record or other information which the
Corporation determines in good faith to be confidential, and of which
determination the Investors or Inspectors, respectively, are so notified, unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (iii) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Corporation shall not be
required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the
Corporation) with the Corporation with respect thereto, substantially in the
form of this Section 3(k).
Each Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Corporation and
allow the Corporation, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. The Corporation shall hold in confidence and shall not make any
disclosure of information concerning an Investor provided to the Corporation
pursuant to Section 4(e) hereof unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Corporation agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to such Investor, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information;
(l) use its best efforts either to secure designation of all the
Registrable Securities covered by the Registration Statement as a National
Association of Securities Dealers Automated Quotations System ("NASDAQ")
"SmallCap" or "National Market System Security" within the meaning of Rule
11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the quotation of the Registrable Securities on the NASDAQ
National Market System or, if, despite the Corporation's best efforts to satisfy
the preceding clause, the Corporation is unsuccessful in satisfying the
preceding clause to secure listing on a national securities exchange or NASDAQ
authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least three market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities;
(m) provide a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than the effective date of the
Registration Statement;
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(n) cooperate with the Investors who hold Registrable Securities being sold
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be sold pursuant to the denominations or
amounts as the case may be, and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may reasonably request;
and, within five business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Corporation shall
deliver, and shall cause legal counsel selected by the Corporation to deliver,
to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) instructions to the transfer agent to issue new stock certificates
without a legend and an opinion of such counsel that the shares have been
registered; and
(o) take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to the
Registration Statement.
4. Obligations of the Investors. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Corporation
to take any action pursuant to this Agreement with respect to each Investor that
such Investor shall furnish to the Corporation such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Corporation
may reasonably request. At least five (5) days prior to the first anticipated
filing date of the Registration Statement, the Corporation shall notify each
Investor of the information the Corporation requires from each such Investor
(the "Requested Information") if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration Statement. If
within three (3) business days prior to the filing date the Corporation has not
received the Requested Information from an Investor (a "Non-Responsive
Investor"), then the Corporation may file the Registration Statement without
including the Registrable Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Corporation as reasonably requested by
the Corporation in connection with the preparation and filing of the
Registration Statement hereunder, unless, in connection with the preparation and
filing of the Registration Statement, such Investor has notified the Corporation
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(c) In the event Investors holding a majority in interest of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and to take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Corporation in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement;
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(d) Each Investor agrees that, upon receipt of any notice from the
Corporation of the happening of any event of the kind described in Section 3(f)
or 3(g), such Investor will immediately discontinue disposition of the
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and, if
so directed by the Corporation, such Investor shall deliver to the Corporation
(at the expense of the Corporation) or destroy (and deliver to the Corporation a
certification of destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice; and
(e) No Investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements approved by the Investors
entitled hereunder to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and other fees and expenses of investment bankers and
any manager or managers of such underwriting and legal expenses of the
underwriter applicable with respect to its Registrable Securities, in each case
to the extent not payable by the Corporation pursuant to the terms of this
Agreement.
5. Expenses of Registration. All expenses (other than underwriting
discounts and commissions and other fees and expenses of investment bankers and
other than brokerage commissions) incurred in connection with registrations,
filings or qualifications pursuant to Section 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting fees
and the fees and disbursements of counsel for the Corporation, shall be borne by
the Corporation; provided, however, that the Investors shall bear the fees and
out-of-pocket expenses of the one legal counsel selected by the Investors
pursuant to Section 3(h) hereof.
6. Indemnification. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Corporation will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act, any underwriter (as defined in the Securities Act) for the
Investors, the directors, if any, of such underwriter and the officers, if any,
of such underwriter, and each person, if any, who controls any such underwriter
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, expenses or
liabilities (joint or several) (collectively "Claims") to which any of them
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any post-effective
amendment thereof, or any prospectus included therein: (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
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necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Corporation files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading or (iii) any violation or
alleged violation by the Corporation of the Securities Act, the Exchange Act or
any state securities law or any rule or regulation (the matters in the foregoing
clauses (i) through (iv) being, collectively, "Violations").
Subject to the restrictions set forth in Section 6(d) with respect to the
number of legal counsel, the Corporation shall reimburse the Investors and each
such underwriter or controlling person, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) (I) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Corporation by any Indemnified
Person or underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Corporation pursuant to Section 3(c) hereof; (II) with respect
to any preliminary prospectus shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any person
controlling such person) if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected in the prospectus, as then
amended or supplemented, if such prospectus was timely made available by the
Corporation pursuant to Section 3(c) hereof, and (III) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Corporation, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Persons
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 6(a), the Corporation,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Corporation within the meaning
of the Securities Act or the Exchange Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Corporation by such Investor expressly for use in
connection with such Registration Statement; and such Investor will promptly
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
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written consent of such Investor, which consent shall not be unreasonably
withheld; provided further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and hall survive the transfer of the Registrable Securities by
the Investors pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
(c) The Corporation shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof and his indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and other party represented by such counsel in such
proceeding. The Corporation shall pay for only one separate legal counsel for
the Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. Contribution. To the extent any indemnification provided for herein is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(a) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
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shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation and (c) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. Reports under Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Corporation to the public without registration, until such time as the Investors
have sold all the Registrable Securities pursuant to a Registration Statement or
Rule 144, the Corporation agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Corporation under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Corporation
that it has complied with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Corporation and such other reports and documents so filed by the
Corporation and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. Assignment of the Registration Rights. The rights to have the
Corporation register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities only if: (a) the Corporation is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (i) the name and address of such transferee or assignee and (ii) the
securities with respect to which such registration rights are being transferred
or assigned, (b) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws, and (c) at or before
the time the Corporation received the written notice contemplated by clause (a)
of this sentence the transferee or assignee agrees in writing with the
Corporation to be bound by all of the provisions contained herein.
10. Amendment of Registration Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Corporation and Investors who hold a majority in interest
of the Registrable Securities. Any amendment or waiver effected in accordance
with this Section 10 shall be binding upon each Investor and the Corporation.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Corporation receives conflicting instructions, notices or elections from two
or more persons or entities with respect to the same Registrable Securities, the
Corporation shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.
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(b) Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered or when
sent by registered mail, return receipt requested, addressed (i) if to the
Corporation, at American Bio Medica Corporation, 000 Xxxxxx Xxxx, Xxxxxxxxxx,
Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxxx, (ii) if to the Initial Investor, at
the address set forth under its name in the Subscription Agreement and (iii) if
to any other Investor, at such address as such Investor shall have provided in
writing to the Corporation, or at such other address as each such party
furnishes by notice given in accordance with this Section 11(b), and shall be
effective, when personally delivered, upon receipt, and when so sent by
certified mail, four business days after deposit with the United States Postal
Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to the agreements
made and to be performed entirely within such state. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
(e) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
AMERICAN BIO MEDICA CORPORATION
By: s/Xxxx Xxxxxxxxx
----------------
Xxxx Xxxxxxxxx,
President
MIDLAND XXXXXX CAPITAL INC.
By: s/Xxxxxxx X. Xxxxxx
-------------------
Xxxxxxx X. Xxxxxx
Senior Vice-President
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